USUBC Washington Watch No. 5

U.S.-Ukraine Business Council (USUBC),
Washington, D.C. Friday, January 20, 2017

(1) What Are Russia’s Real Goals in Ukraine? – The Wall Street Journal, a Letter-to-the-Editor –

Responding to Victor Pinchuk’s late December white flag waving op-ed, Ukraine Must Make Painful Compromises for Peace With Russia, Marieluise Beck, a member of the German parliament, argues only if Moscow (1) provides credible assurances that it accepts an independent path of development for Ukraine, (2) if the idea of limited sovereignty for Ukraine is abandoned and (3) if there is no repeat of ignoring the Budapest Memorandum that promised Ukraine’s territorial integrity but was violated without consequence—only then can there be a step-by-step approach to guarantee the future of a free Ukraine.

NOTE: Interesting that this has to be pointed out publicly to a Ukrainian oligarch by a German parliamentarian.

2. Former U.S. Representatives: Increase support to Ukraine to deter Russia – The Hill –

The U.S.-Ukraine Foundation’s Friends of Ukraine has brought together a new group, Former Members for Ukraine, made up of a growing number of former Members of Congress who are interested in assisting Ukraine in Washington. The founding Members, Jim Gerlach (an Advisor to the USUBC) and Mike Fitzpatrick, Republicans from Pennsylvania, Dennis Hertel, Democrat of Michigan and Jim Moran, Democrat of Virginia had published their initial op-ed in The Hill.

In it they argue, among other things, (1) Congress should urge the White House to provide Ukraine with lethal defensive arms, the supply of which the Congress authorized in a $350 million security aid package; (2) The immediate U.S. emphasis must be on inducing Russia to stop its war in the Donbas and withdraw its forces and mercenaries. Resolving Crimea will take longer; as with the Baltics during the Cold War, the West should never accept its illegal annexation; (3) In March, the U.S. should extend its sanctions regime against Russia, just as the European Union did in December. Western economic sanctions are a major constraint on international finance and energy investment in Russia; and (4) The U.S., along with its Western allies, should press Ukraine to speed reforms.

Freeland was sworn in as Canada’s Minister of Foreign Affairs on January 10. She is a descendent of Ukrainians and has been for a long time very active in supporting Ukraine (including in Washington), and has a clear understanding of Vladimir Putin (especially since she is on his blacklist and forbidden to travel to Russia). She will be excellent on Ukraine issues.

In declaring Freeland good for Ukraine this op-ed draws what it sees as the distinction between she and the incoming Trump Administration and, in that regard, not only Trump’s public statements about Putin and Russia but Ukraine’s government publicly “cheering for the losing horse in the U.S. Presidential election."

As the Trump administration gets underway, its most influential foreign policy figures are not its Cabinet nominees, or even the National Security Council, but a handful of senior people close to the president-elect. Donald Trump has a national security kitchen cabinet that is shaping his policies and setting itself up as the center of power for all matters of international significance.

At the time of Friday’s inauguration Stephen Bannon, chief strategist, Jared Kushner, son-in-law, and Reince Priebus, White House Chief-of-Staff make up an informal council sitting atop Trump’s team and have final say on national security personnel appointments. National Security Advisor-Designate, retired Lt. General Michael Flynn is also playing a role but the big three are on top. When Trump’s Cabinet members are confirmed and staffed up, heads of the national security departments and agencies could exert great influence but for now they are not in place and operational.

In this context one should realize that the world and its crisis are not going to be waiting for the transition to complete making the big three critical to Ukraine at least in the short term. In Washington and in the media many are trying to predict Trump and analyze what he will do. This is Washington custom but Trump is Trump and it is doubtful anyone can accurately predict what Washington – or Ukraine – has in store over the next months.

Ukraine is ramping up its defense industry at a Soviet-era tank factory here near Europe’s deadly front line with Russia, as officials wonder what the inauguration of President-elect Donald Trump will mean for their country.

Support from the United States and other allies are critical to Ukraine as it fights Kremlin-backed and regular Russia forces (the article itself only mentioned the Putin propaganda “Moscow-backed separatists” continuing to prove Russia misinformation and media mischief continue successfully). But Ukraine is doubtful Trump deliver weaponry it could not get from President Obama. So, continuing to fight for itself and for the world on the front line of the post-WWII world order, Ukraine has no choice but to upgrade it’s tank fleet with new turrets, an improved main gun and better armor to stand up to more-sophisticated Russian armaments.

In comments to CNN Congressman Steve Chabot, an Ohio Republican, who is a senior member of the House Committee on Foreign Affairs, says Trump is right: it would be nice if we got along with Russia. It is important to see dialogue and engagement as tools for achieving our objectives, not ends in and of themselves.

Trump needs to understand (1) Moscow are driven by its search for prestige, and its loss of relative military and economic power. (2) Even a successful reset will not see a Russo-American relationship resemble our relationship with Britain. We may, however, be able to cooperate with Russia on some issues while differing on others, such as protecting our allies in NATO, or on Russia's misbehavior in Ukraine. (3) The Kremlin has a series of instruments at its disposal that give it leverage.

For example, because of Obama's position on Syria, Russia may try to leverage this in other sensitive regions, such as the Baltics. And (4) America does not have a Putin problem. Putin is a fairly typical Russian authoritarian leader, although more effective than most. If he were to pass away or be overthrown tomorrow, his successor would likely pursue a substantively similar foreign policy. America has a Russia problem, in that we have a difference in interests.

An earlier Washington Watch newsletter included an article from The Hill, “Ukraine hires lobby firm ahead of Trump inauguration” reporting that the Government of Ukraine had hired BGR Group to represent its interests in Washington. BGR is headed by Haley Barbour, former Chairman of the Republican Party and former Governor of Mississippi.

The article (a link to which is set out below) reported that the names on the contract – the individuals in BGR who will do the work – are Barbour, Ed Rogers, Lester Munson (former staff director for the Senate committee on Forign Relations, and Maya Seiden, a Department of State official during Hillary Clinton’s tenure as Secretary.

Indeed, a check of filings at the Department of Justice’s Foreign Agents Registration office showed the BGR Government Affairs LLC January 1, 2017 filing.

The filing showed that (1) the client was/is: President Administration & National Reforms Council, and the contact was/is Dmytro Shymkiv, Deputy Head of the Presidential Administration of Ukraine & National Reforms Council Secretary; (2) BGR will provide strategic public relations and government affairs counsel for the Government of Ukraine. This may include relevant outreach to U.S. government officials, non-government organizations, members of the media and other individuals within the U.S.

The Registrant and Foreign Principal have agreed to an initial fee of USD$50,000.00 per month through December 31,2017; (3) activities on behalf of client will work design and implement a comprehensive government affairs and business development strategy to support strengthening US-Ukrainian relations and increasing US business investment in Ukraine; (4) will build support and help open lines of communication with government and non-government organizations to strengthen US-Ukrainian relations and increasing US business investment in Ukraine.; and (5) noted that there is no formal written contract between the registrant and the foreign principal. The agreement with Ukraine resulted from an exchange of correspondence.

NOTE: the actual BGR filing, contrary to the article in The Hill, says there is no contract and does not list individuals who are to provide the services.

Well, is any of this true? Hum, maybe yes.On January 11, Ukrainska Pravda reported that on Radio Liberty Andriy Zhigulin, Head of the Press Service of the Presidential Administration of Ukraine, disputed the report. Zhigulin said, "In fact, the documents published FARA, are incorrect. In the next few hours all the data will be corrected and you will see them." Zhigulin did not explain what exactly was the error, and/or whether the current Ukrainian administration called for the services of lobbying firms in the United States. "Let us first wait for the situation clarification, because everybody spread incorrect information. It is the human factor, there (at the Department of Justice’s registration office – USUBC editor).”

Editor.....the fact is that what is contained in the Foreign Agent Registration filing is simply a copy of BGR’s filing, nothing was done at the office to change what BGR filed.

But, yesterday (January 18) Dmytro Shymkiv posted on his Facebook page (a curious forum) that BDR was hired and said, “We are often criticized that we don’t sufficiently inform the international community about the progress of reforms and investment opportunities in Ukraine. But when within the scope of the program to promote Ukraine globally an initiative is launched, for the last several days incorrect information is being circulated.

"Thus, as the Secretary of the National Council for Reforms, I hereby inform you of the following: In order to promote Ukraine’s interests in the U.S., attract the U.S. investments and inform the governmental and civic institutions in the U.S. about achievements and results of reform in Ukraine, the National Council for Reforms, with the assistance of Ukrainian Fund to Support Reforms, engaged a U.S. company, BGR Group, as consultants. This initiative is made possible through donor funds and does not use [Ukraine] government funds.”

NOTE: Is this the end to the story? Probably not. What were the mistakes in the FARA filing? Who is doing the work for which BGR has been hired? Who is paying BGR and what control over BGR might it/they have? There is no history of Ukrainian officials knowing how to manage such consultants, the absolute key to defining and achieving success through such engagements.

8. NATO Chiefs of Defence Meet in Brussels – NATO release – During the meeting this week Ukraine was able to share its perspective on its regional security situation and provide an update in a dedicated session. Ukrainian General Muzhenko briefed on the current state of affairs of the Ukrainian Armed Services and Defense reforms.

Senate Majority Leader Mitch McConnell (R-KY) in an interview with McClatchy called Russia “a big problem” and said that NATO “is the most important military alliance in world history and is more important than it ever was.” This was just days after President-Elect Trump continued his criticism of the alliance calling it “obsolete” in an interview with a German newspaper. It is fair to say, as has been reported in earlier newsletters, that Congress has been and is more hawkish than the Obama Administration and more hawkish than the pre-inauguration comments of President-Elect Trump and, indeed, more pro Ukraine.

However, in the context of commenting on this fairly narrow story it is again worth emphasizing that Congressional support for Ukraine is far more problematic at the moment than most seem to recognize. In previous newsletters concern has been raised about the impact of Trump’s twitter assaults on opponents. Many Members of Congress have already indicated in private their hesitancy to speak out and/or sign documents condemning Putin and/or strongly supporting Ukraine in fear that Trump might attack.

Trump proved during the election that huge numbers of voters respond to his tweets and can change election dynamics within constituencies. Indeed, when Senator Marco Rubio (R-FL) pressed hard Trump’s nominee for Secretary of State, Rex Tillerson, on Russia and human rights issues, Trump’s tweet unleashed a tsunami of attacks on Rubio. Until much more is known – through experience – what Trump might actually do regarding Russia, etc. anticipate unusual caution from many individual Members of Congress.

10. McCain still 'very concerned' about Tillerson – Politico - Rex Tillerson's nomination is still up in the air. John McCain (R-AZ) said on Wednesday evening that he remains undecided about supporting the secretary of state hopeful's nomination, an adjustment from his stance earlier this week that he is leaning toward support the former ExxonMobil CEO.

McCain, along with Sens. Marco Rubio (R-Fla.) and Lindsey Graham (R-S.C.), could cause major trouble for Tillerson's nomination if they all come out against him. Reflecting on the comments immediately above it should be noted that tweets may not have as great an impact on senators who serve for six years (as opposed to House members who have two year terms) and both McCain and Rubio were just re-elected.

11. Senate panel approves Mattis for Defense secretary – The Hill - The Senate Armed Services Committee on Wednesday approved the selection of retired Gen. James Mattis to be Defense secretary, setting him up to be confirmed by the full Senate as soon as President-elect Donald Trump is inaugurated and officially nominates him.

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--------------------------------------------------------------------------------------------------NEWS: For the latest news about Ukraine go to the KYIV POST website: www.KyivPost.com.

The Kyiv Post of the ISTIL Group is a member of the U.S.-Ukraine Business Council (USUBC).
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